PHILADELPHIA (CBS) — The Valley Forge based Vanguard company, already a behemoth in the mutual fund industry, is rolling out new strategies – actively-managed exchange-traded funds – or what analysts call “smart beta ETF’s.” It’s a departure from its “plain vanilla” offerings.
The new suite of strategies allow mostly financial advisers and institutional investors to tap into specific risks or return objectives, by picking individual stocks, and piling them into baskets, called factors, in the industry.
“To some extent, Vanguard is indeed, in this case, keeping up with the Joneses,” said Ben Johnson, the director of global ETF research for Morningstar, the Chicago based mutual fund research company. “What I see this as more so than anything else is a rounding out of Vanguard’s existing product portfolio.”
Vanguard touts them as extensions of its low-cost regular, active lineup. Johnson says the smart beta ETF’s are tilted to minimum volatility, value, momentum, liquidity or quality factors.
“These are more direct, more targeted,” he said, “more potent exposures to a variety of different investment factors.”
Vanguard, which manages nearly $5-trillion in global assets, is the largest provider of mutual funds in the world.